The Rural Voice, 1988-01, Page 20PROJECTIONS
FINANCES AND PHILOSOPHY
ON THE FARM IN 1988
There may b° nothing new under the sun, but when it comes to beating the cost -price squeeze on
the farm, it's worth taking a second look at some of the financial and management strategies
offered by farmers, extension personnel, and agribusiness people. It's also worth questioning the
Tong -term, underlying consequences of more general farm policy, the policy that eventually shapes
the decisions made in the day to day operation of the farm itself. Here's some "food for thought."
"SEIZING OPPORTUNITY"
Basil Haefling, a chartered
accountant, worked as manager of
Ward Mallette in Owen Sound before
joining Price Waterhouse's Kitchener
office. He ran a dairy farm in Grey
County until the early 1980s, and was
a member of the 1986 task force of
the Ontario Institute of Agrologists
on "Directions for Sustainable
Agriculture."
Speaking as a panelist at the
Canadian Bankers' Association con-
ference in Toronto recently, Haefling
noted that farm debt in Canada now
stands at $22 billion, an increase of 10
per cent since 1982. The statistics, in
fact, aren't friendly: 46 per cent of
farmers are about age 50 or more, the
average equity of Farm Credit Cor-
poration borrowers is less than 50 per
cent, and there are significant tran-
sitions and adjustments yet to be
made.
Capital assets, Haefling added,
will be discounted an additional 20
to 50 per cent, because given today's
economic and trade situation the
Canadian agricultural industry can
only be competitive with "a much
lower capital base." Government
intervention, Haefling said, can only
slow the adjustments.
According to Haefling, you will
need:
• capital
• highly productive land
• sound management skills
• competitive production.
BASIL HAEFLING
Given the "bleak scenario," he
added, the opportunities that are
available are going to be seized only
by those with these four qualifications.
He outlined the following
promotion of research and develop-
ment,
• payments to induce production
make no sense; neither do payments
to protect exports,
ONE VIEW:
"There's an urgent need to move away from using production as the
measuring stick for rural and agricultural enterprises and infrastructures.
That will be both economically and intrinsically difficult. Farmers ... have
defined themselves in production terms, not as producers of scenic
landscapes or stewards of open space, wildlife, and clean water. Are we
readyto have city folk on a Sunday tour prize our countryside more highly
for its beauty than for the food we produce?"
— Elbert van Donkersgoed, Christian Farmers Federation of Ontario
recommendations and caveats for
farmers and government:
• reduce capitalization: rent land,
machinery, and even livestock; use
custom operators,
• keep thorough records: manage-
ment and marketing courses, he added,
should be mandatory in all agricultural
diploma and degree programs,
• plans for every aspect of the
business, from production to market-
ing, are critical,
• all agricultural businesses should
prepare a comprehensive business
plan on an annual basis,
• all commodities should be
organized in terms of stabilization
plans, production targets, and the
• equity financing should be
considered,
• govemments should provide
education and promote agricultural
opportunities,
• govemments should offer clear
messages regarding Canada's agri-
cultural policies in areas such as
exports and production locations. (It
makes no sense, for example, to make
the Eastern provinces self-sufficient in
grain if the West has surpluses,
Haefling said.),
• a farmer's equity base should be
70 per cent,
• the organic market in Europe is
healthy and may be lucrative for some
farmers.0
18 THE RURAL VOICE